Homework Answers
Cost of building purchased = $120,000
Cash paid = $30,000
Mortgage taken = $90,000
Increase in assets = Cost of building purchased - Cash paid
= 120,000 - 30,000
= $90,000
Increase in liabilities = Mortgage taken
= $90,000
Thus, the given transaction will increase both the assets and liabilities by $90,000
Correct option is (B)
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Purchasing a building for $120,000 by paying cash of $30,000 and obtaining a mortgage for $90,000...
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